Taxi and Private Car Hire Market

Lord Borwick Excerpts

Tuesday 20th October 2015 Lords Chamber

[Lord Borwick (Con)]

My Lords, I declare a past interest, having spent 15 years in the London taxi industry as the chief executive and later chairman of Manganese Bronze, which made the London black cabs. Also, I now own a licensed London taxi and employ a taxi driver.

I shall talk about one of the best features of all London taxis, which I introduced in 1997 with the late Sir Peter Baldwin and Ann Frye. We made wheelchair access for London taxis as standard. That meant that black cabs were the first form of public transport to offer this kind of access in all its vehicles. In my experience, taxi drivers very often do fantastic work for their own charities, but they also do wonderful work picking up a whole variety of individual passengers with individual needs, taking them directly to their destination.

We now know that Uber has been declared “lawful”, but we are still in murky waters when it comes to regulating the sector appropriately. TfL has recently published new proposals for the regulation of minicabs, which I think are broadly right. That is why today’s debate is so important and I thank the noble Lord, Lord Bradshaw, for raising it.

It is clear that the system of regulation for taxis—certainly for minicabs—is out of date in London, but there is much to be proud of in our approach. For instance, we regulate the taxi industry in London by quality, while other cities around the world regulate by quantity. That is a fundamental difference between London and elsewhere. In New York City, for example, the cost of medallions, or taxi licences, topped $1 million in 2011 because of the limited number issued originally. I am told that the value has fluctuated down to about $300,000 as a result of the growth of Uber.

In London, we are rightly proud of the quality of our taxi drivers and the service that they provide. With the knowledge, we have a wonderful three-year system for weeding out the chancers, crooks and con artists. Such future convicts do not have the patience to learn the knowledge. A very small number might get through, but it is extremely rare. As such, completing the gruelling training, studying and examinations rightly generates immense pride in people who have gone through it. Three years’ work, voluntarily undertaken, unpaid, by intelligent people is a tremendous investment in good public service. It is about £150 million of labour, volunteered to make our taxi service better.

The trouble is that structuring a test around geography means that we are just testing people on a computable problem. The taxi driver of the year competition used to challenge drivers to visit places scattered around London. The driver with the least money on the meter was declared the winner. Only in London could this happen. But technology moves on: today’s smartphones know the geography of London better than the London taxi driver of the year. Apps such as Hailo, Uber and Gett do a wonderful job in enabling a customer to get a cab without waving their hand in the air.

Here I declare another past interest. I believe that the first hail of a taxi from a mobile phone anywhere in the world happened in 2002 from my office. It was through Zingo, a subsidiary of my then company, which developed this technology. Having had often to walk in the rain from my house to get a black cab, I thought I should be able to order one from my kitchen instead to pick me up. This was way before the advent of the smartphone, so it was too early to be a success. We had no idea that we had invented the concept behind Uber.

When we worked on a prototype, we were sure that there must be a relationship between the number of taxis and the speed to answer an electronic hail. We did not know whether this related to the square root of the number of vehicles on the system or some other way of calculating it, but there clearly is a connection. The number of private hire vehicles in London was nearly 63,000 at the beginning of this year, an increase of 26% since 2013. There are about 88,000 or 89,000 drivers today, growing at about 650 per week.

That rapid growth in the number of private hire vehicles in London is so important. Because of that enormous growth relative to taxis, the market has been disrupted. This is not necessarily bad, but it could have some unpredictable effects. People living in residential streets near Heathrow and other Uber “money pots” complain about the number of Uber cars parked in their streets waiting for calls. It should not be illegal to park in a street, but sleeping in cars is certainly undesirable. Should we even think of restricting the number of minicabs? Should we think of charging them a fee for working in the central London congestion charge area?

A taxi has a driver plying for hire, while a minicab is a pre-booked service. The system of hailing through a mobile phone has made plying for hire more efficient, but has bypassed the regulations requiring minicabs to be pre-booked. Because of it, the distinction between minicabs and taxis has been markedly reduced.

When the user’s screen on a smartphone shows 20 private hire vehicles within half a mile and one responds, coming directly to them, it is really hard to argue that these vehicles are being pre-booked in accordance with the spirit of the original regulations. One of the new regulations being consulted on by TfL removes the possibility of showing these 20 minicabs geographically on a screen, but I doubt that it will be possible to write such a regulation without it being bypassed by a message saying, “There are 20 Uber cars within half a mile of you”. But is this always true? There have been suggestions that some apps add vehicles to the screen that are not actually there, to make it look busier. In any case, the best that could be achieved is to have the operator at least certify that the information that he provides is accurate.

Another new regulation being considered is to build in a five-minute delay to enable the passenger to read the details of the driver arriving. I also doubt that this will work, as any extra five-minute delay is not in the interest of the passenger wanting a vehicle right now. I believe that a simple extra chip in the minicab could broadcast to the passenger the details of his cab when it arrives, and confirm that it is not an imposter. The regulator, however, has on file the national insurance number for minicab and private hire drivers. It would, therefore, be easy to require private hire operators, such as Uber, to ensure that their drivers had a good tax history. Uber will be paying tax in Holland, as is its right, but will it not be eager to ensure that its drivers are legal taxpayers here?

Uber is an astonishing company because it has made itself disliked worldwide by regulators, but loved worldwide by customers. The hard truth for any industry is that disruptive technologies are the most powerful way of updating sclerotic practices. That means we must have new regulations so that the good work of London taxi drivers does not die out. It is an astonishing coincidence that this afternoon Uber has announced UberAssist, a system which it says will help disabled passengers. However, the vehicles are not accessible, and a very few partially trained drivers will help but not meet the need. To lose the wheelchair access of the purpose-built London taxi would be a tragedy for disabled people. One of the great costs of disability is the overhead of planning. To spend one’s life constantly working out when and where you relieve yourself, and how you are going to get home, is the sort of thing that most disabled people are required to undertake as part of their disability. London taxis, with wheelchair access as standard, provide an important service that allows disabled people to make spontaneous decisions. That gives them freedom to change their minds—a privilege that should not be reserved to the able-bodied.

The future of regulation for this industry must be designed to preserve and enhance the pride and self-confidence that typify the taxi drivers of London. The system of testing geography, though, is outdated. Many features of dealing with the public responsibly could be designed into a testing system. Furthermore, the full range of disabilities is wider than can be easily imagined by taxi drivers, so I also recommend that drivers are required to do a longer course in disability awareness. That could even include sitting in a manual wheelchair for a few hours, attempting to carry out everyday tasks. I also say that, to embrace the future while preserving the high standards of our taxis, they should be required to incorporate at least one of the taxi-related hailing apps. Taxis must not be harder to hail than private hire. Furthermore, taxi drivers must be more welcoming of customers who prefer to pay with credit cards. People go about their entire daily business with no cash and use cards only. Making it difficult to use cards, quite often purposefully, or charging an absurd premium, is losing customers for taxis.

Overall, the growth of Uber and the efficiency of its system is much loved by the public, but it would be a tragedy if its system damages the taxi trade and accessibility for disabled people. If it does, then the only solution will be to require minicabs to be accessible.